Expressing concern over the approach of total outsourcing by banks, the Reserve Bank of India on Wednesday said outsourcing of certain components should be explored instead of an overall transfer of function.
"The maxim in the case should be to outsource and not to abdicate responsibility," RBI department of IT chief general manager G Padmanabhan said during an international conference on banking technology.
In the context of banks, he said: "We cannot outsource risk but outsourcing itself is a risk and adds on to the basket of risks managed by banks."
He also cited examples of banks that were defrauded because of total dependence on an outside entity.
Padmanabhan suggested that transfer of function should be of activities which are not core functions of the banks or which have a high impact on costs.
The value for the investment in outsourcing must be the yardstick for evaluation of the benefits rather than traditional method such as ROI or IRR, he said.
Padmanabhan pointed out that outsourcing should be within the controllable purview of the banks.
He added that a 'one-size-fits-all' cannot be used as the model will vary from bank to bank.
Modular outsourcing -- as called by Infosys chairman N R Narayana Murthy -- recommends outsourcing of peripheral activities instead of end-to-end outsourcing of all functions.
"Tasks which are the core competencies should continue to be performed by the organisations," he said.
